Becoming a data-driven legal department in 2013

This article is the final installment in a four-part series designed to help corporate law departments gain new insights into the application of “Big Data” in the legal industry. Read parts one, two and three.

Businesses continue to operate with an eye towards efficiency, not only as it relates to cost and performance but also as it pertains to operations—often referred to as the “new normal.” In this new environment, many companies are turning to data-based insights to aid in the decision process. As outlined in this four-part series, legal departments are not excluded from this model. My colleague, Craig Raeburn, and I have offered best practices for a legal spend data management strategy throughout this series. This final installment will center on how legal departments can apply that same discipline to other areas of legal data.

According to an Economist Intelligence Report, companies that significantly outperform their peers are more likely to collect, or plan to collect, multiple types of data for the strategic decision-making process. Based on the documentation process of the legal profession, legal departments are ahead of the curve in the collection phase, but lag behind other departments in turning this information into actionable insights.

Problem solving

Big data is not a “magic button” that will help legal departments become more efficient, but rather a tool that can bring results when implemented correctly. Before a company embarks on a “big data” plan, there are a few steps it should take:

Apply a data analytics program to only one practice area as a trial, which can then be rolled out to other areas

Seek out the best partners to help achieve results for each discipline

Engage the IT department and external resources to set up the best analytical program

Start slow

As mentioned, a department should select one practice area as a trial. Here, we will focus on the labor and employment discipline. Organizations rely on the expertise of their general counsel to solve employment disputes quickly and efficiently, avoiding court hearings. In-house counsel can add more value in this area by creating a preventative “dispute” program.

Data can help. Rather than wait to comb through complaint reports as part of the discovery of an employment lawsuit, the legal department should establish a data analytics strategy with the human resources department to glean insights on a regular basis. Complaints can be a source of data for a legal department seeking to put preventative measures in place. The complaint data cross-referenced against legal dispute data can generate insights that can lead to greater preventative measures.

In-house counsel should consider the following ways to slice the data for insights:

Geography. A geographical heat map can indicate which areas or locations have a consistently higher ratio of labor disputes.

Dispute categories. By first configuring the disputes into standard categories, in-house counsel can analyze the data for insights into which categories always resulted in a court case and which were more frequently resolved without litigation.

Outside counsel: By analyzing court decisions against law firm panels and geography, law departments can identify the most cost-effective firm for each type of dispute.

Wage garnishments. By analyzing service of process for wage garnishments, organizations can identify the location and/or employee level where garnishment is high, and then employ tactics to reduce risk to the company in such cases.

Best practices and right resources

Some legal departments are resistant to “big data” because they are not skilled in the areas of data analysis or data management. While not every law department can hire mathematicians and scientists, in-house counsel should not shy away from building a data program because of that deficit. According to Computer World, some of the appropriately skilled talent already exists within the company. Employees with intense curiosity and strategy-focused minds are the type of talent the legal department should engage with, be they from the accounting department or customer research. In addition to finding the right analytical skill set, companies should enlist the IT department as a key partner for this effort to build the infrastructure to enable a “big data” program.

For specific practice areas, like labor and employment, the legal department must establish a true partnership with human resources to ensure that it accurately captures the required data for analysis. External sources can also be big contributors to the program. For example, payroll service can supply data about wage garnishment and the registered agent can provide insights into the service of process trends.

Moving forward

A successful legal “big data” program starts with identifying the problem you wish to solve and seeking partnerships that will help the law department find actionable insights. There is no better time than now to initiate a “big data” plan.